Post-retirement will be a bliss after investing in SIP- Rs. 9 lakhs Monthly Pension! - YP Buzz Finance

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         The craze of investment among the Indian millennials is common. One of the most known investment tools is the SIP or Systematic Investment Plan. The increasing popularity of mutual fund SIP was a result of allowing investors to gain a large sum of money by investing a small amount monthly. According to what the tax and investment experts say, an investor will get a compounding benefit by getting interested in interest which will help in increasing one’s return on money, if they invest in mutual fund SIP for long term. 

                                                                           

SIP

They also have a word of advice for the investors, investing in the monthly SIP, which is to use the annual step-up in SIP to enhance their monthly investment. This will help an investor to utilize more financial freedom after retirement.

For example, and according to tax and investment experts, if an investor has invested Rs. 10,000 every month in mutual fund SIP and has availed 10 percent annual step-up, he or she can collect around Rs. 12.7 crore at the time of maturity.

Jitendra Solanki, SEBI registered tax and investment expert, speaking on mutual fund investments said, “Mutual fund investments are subject to market risk but in long -term this market risk goes down and chances of higher return scales much high”. He also said that an investor will be able to start with a small amount and in long term, he will accumulate a big amount if he invests in mutual fund SIP. He also advised that one should use the annual step-up in monthly SIP amount in order to increase one’s monthly SIP with an increase in one’s annual income.

Kartik Jhaveri, Director- Investments at Transcend Capital said that while investing in SIP, one should opt for 10 percent annual step-up in one’s monthly SIP which is known to be an ideal practice. “So, raising monthly SIP in sync with rising in one’s monthly income won’t be a hectic task for an investor”, he said.

He also said that one can expect at least 12 percent annual return, which can also increase up to 16 or maybe 17 percent, if an investor is investing for the long term, like 30 years or more. Continuing he said that on average, one can get a 15 percent return, investing in mutual fund SIP for 30 years or more if he or she has chosen the plan properly.

So, going by the average 15 percent return, an investor investing Rs. 10,000 monthly using 10 percent annual step-up for 30 years, the SIP calculator suggests that he or she can accumulate around Rs. 12,69,88,106 or Rs. 12.70 crore at the time of maturity.  

Keeping all this aside, the main question arises that how one should use these Rs. 12.70 crore maturity amount to live one’s life after retirement with more financial freedom? The Tax and Investment experts have also answered this query. They said that like in pre-retirement one opts for SIP, similarly, in the post-retirement phase, one can opt for SWP or Systematic Withdrawal Plan where if you put a huge amount it helps in creating regular monthly income.

On this, Vinit Khandare, CEO & Founder at MyFundBazaar said, “For investing Rs. 12.69 crore in SWP for 30 years expecting 8 percent return per annum, one can expect a monthly income of around Rs. 9 lakhs.”

He also listed out the following SIP plans:

Small-cap Fund: SBI Small Cap Fund- Regular Growth;

Mid-cap Fund: Aditya Birla Sun Life Mid Fund- Plan- Growth Regular Plan;

Large-cap Fund: HDFC Top 100 Fund- Regular Plan- Growth.   

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